William Blair, one of the long-established mid-market investment banks, is understood to be building capabilities around GP-led continuation funds as such processes are increasingly being seen as a necessary option for a sponsor’s exit path.
The mid-market-focused institution is one of several banks and financial advisers adding secondaries capabilities. Guggenheim Securities is bringing on Citi’s head of private capital advisory Orcun Unlu to rebuild its secondaries advisory capabilities, while Jefferies, Moelis & Co and Houlihan Lokey have all added secondaries talent in recent years.
William Blair has been talking to a well-known secondary adviser, who is said to be joining along with another colleague, sources told affiliate title Buyouts. That could not be confirmed as of press time. William Blair spokesperson Tony Zimmer did not respond to a comment request.
It is not clear if William Blair intends to grow beyond offering sponsors continuation fund structures as part of their exit options. Other newer teams, like the secondaries advisory group at Jefferies, which joined from Greenhill and a short stint at Guggenheim, offer the full suite of secondaries transactions, including GP-leds as well as traditional LP portfolio sales.
What some of these advisers are seeing is “M&A mandates go to people who have that capability”, around secondaries, according to a secondaries buyer. “They’re all looking for a person right now” to run continuation fund processes.
It’s more about playing “M&A defense than about wanting to actually be in this business. They don’t want to lose the mandate. We’ll see if any of these [shops] buy a business or build a whole private markets team including secondaries, primaries, which means they actually want to compete with” the bigger secondaries advisors, the buyer said.
An adviser added: “A lot of firms are thinking about it. This is a gap and there are certain companies we’re advising on that end up going to different boutiques because we don’t have this capability. So let’s hire a continuation fund guy to fix that.”
The market itself has moved in a way that makes it highly desirable for firms to get into the secondaries business. Total activity volume in 2021 was estimated at more than $130 billion, the highest level ever. And expectations for this year set deal volume at or even surpassing last year’s mark.
GP-led deals have helped drive the market toward that record. GP-led volume reached an estimated $68 billion last year, accounting for 52 percent of total volume, according to Jefferies’ full-year secondaries volume report.
– This report was originally published on affiliate title Buyouts.